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| Upside breakout seen next week |
| B G Shirsat / Mumbai Jan 17, 2010, 00:38 IST |
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The Nifty closed the session yesterday forming a Doji pattern indicating continued indecisiveness at the current levels. It seems that it will be a while for a consolidation below the crucial resistance of 5,300 to take place, above which a breakout can be expected early next week, says Gautam Shah, a technical analyst with JM Financial. The banking and oil & gas segments will have to participate aggressively for the breakout.
However, the volumes in the derivatives segment continued to be sluggish indicating a lack of interest among participants. The Nifty January futures, which closed the session in a narrow pattern after moving in a band of 16 points, had a trading volume of 11.38 million shares compared to 14.15 million shares on Thursday and over 22 million shares on Tuesday and Wednesday. The open interest (OI) in the Nifty futures remained unchanged, as participants are wary of creating positions on either side.
Technically, the Dow looks set to test the psychological level of 11,000 in the short term, which can fuel a fresh rally here, says Shah. The index has been drifting upwards at a very slow pace without any volatility. All the oscillators on the Nifty are now positive. The trading range for the Nifty has been 5,150-5,300, which is the setting for an upside breakout. The Nifty, however, has strong resistance around its recent high of 5,311, according to a technical analyst at Edelweiss Research.
OI in call options suggests that the Nifty has strong resistance above the 5,300 level. However, traders were seen building long positions in the 5,300 and 5,400 strike calls in the last couple of days, which indicate that market is waiting for an upside breakout next week.
The 5,000 and 5,100 strike puts witnessed profit-booking, while the 5,200 put added three lakh shares in OI through sell-side trades. The 5,300 put added 355,450 shares in OI, mostly through change of hands indicating rising support at this level.
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